Binance USD Loses 43% Of Market Cap Value Following Regulation Issues

Semilore Faleti

1 year ago

3 mins read

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Binance USD (BUSD) has suffered a significant loss of about 43% of its market cap value in the last 3 weeks following a regulatory crackdown by U.S. authorities. BUSD is a popular token issued by the Paxos Trust Company, and it serves as the native stablecoin of the Binance exchange.

On Feb. 13, 2023, news broke out on the U.S. Securities and Exchange Commission (SEC) issuing a Wells Notice to Paxos stating its ongoing deliberation to file a lawsuit against the blockchain infrastructure company on the basis of potential violations of investor protection laws.

According to the SEC, Paxos is found wanting for issuing the BUSD token, which the commission considers an unregistered security and that it should be registered under the federal securities law.

A day after the news of the SEC’s potential lawsuit against the company, the New York District of Financial Services (NYDFS) issued a statement directing Paxos to stop the issuance of Binance USD, leading to a significant fall in the token’s circulating supply and its market cap value.

Data from Coingecko shows the total market share value of BUSD has declined from around $16.13 billion in the second week of February to its current value of $9.63 billion.

BUSD total market cap falls to $10 billion | Source: BUSD Total Market Cap on TradingView.com

This devastating decline has led to the stablecoin falling to 10th place among the largest cryptocurrencies by market cap, with Dogecoin (DOGE), Cardano (ADA), and Polygon (MATIC) all getting ahead. However, for all its troubles, BUSD still remains the world’s third-largest stablecoin.

Potential Lawsuit Causes Panic Among BUSD Whales While USDT Gains In Market Shares

Providing in-depth analytics on the liquidity status of the BUSD token, Santiment reports that the SEC’s possible lawsuit against Paxos has caused a market panic among investors with massive investments in Binance USD.

According to Santiment, there is an increased level of fear causing these stablecoin whales to fluctuate their holdings between BUSD and the market’s second biggest stablecoin – USDC

Source: Santiment

Meanwhile, Tether (USDT), the leader of the stablecoin market, appears to be benefiting from BUSD’s current regulatory troubles.

USDT’s market cap value has grown by over 4%, moving from $68.2 billion to its current value of $71.2 billion during the same time in which BUSD has suffered a decline.

Source: USDT Chart on Coingecko

Binance USD Shares “Similar” Troubles With The Rest Of The Market

While BUSD faces its battles, the crypto market is also experiencing a general price loss, which has resulted in the market’s total cap declining by 21.89% over the last seven days.

During this period, market leader Bitcoin (BTC) has lost 6.7% of its value, with Ethereum (ETH) also recording a price fall of about 5.2%. Meanwhile, other major assets, such as Binance coin (BNB), Ripple (XRP), and Cardano (ADA), are also suffering losses of 6.3%, 5.3%, and 11.8%, respectively.

For now, these price falls are widely interpreted as a general price correction. However, there are growing concerns among investors, especially due to the severe crash of the market shares of the popular crypto-friendly bank, Silvergate.

Featured Image: Binance Academy, Chart from Tradingview and Coingecko

Semilore Faleti

Semilore Faleti is a cryptocurrency writer specialized in the field of journalism and content creation. While he started out writing on several subjects, Semilore soon found a knack for cracking down on the complexities and intricacies in the intriguing world of blockchains and cryptocurrency.

Semilore is drawn to the efficiency of digital assets in terms of storing, and transferring value. He is a staunch advocate for the adoption of cryptocurrency as he believes it can improve the digitalization and transparency of the existing financial systems.

In two years of active crypto writing, Semilore has covered multiple aspects of the digital asset space including blockchains, decentralized finance (DeFi), staking, non-fungible tokens (NFT), regulations and network upgrades among others.

In his early years, Semilore honed his skills as a content writer, curating educational articles that catered to a wide audience. His pieces were particularly valuable for individuals new to the crypto space, offering insightful explanations that demystified the world of digital currencies.

Semilore also curated pieces for veteran crypto users ensuring they were up to date with the latest blockchains, decentralized applications and network updates. This foundation in educational writing has continued to inform his work, ensuring that his current work remains accessible, accurate and informative.

Currently at NewsBTC, Semilore is dedicated to reporting the latest news on cryptocurrency price action, on-chain developments and whale activity. He also covers the latest token analysis and price predictions by top market experts thus providing readers with potentially insightful and actionable information.

Through his meticulous research and engaging writing style, Semilore strives to establish himself as a trusted source in the crypto journalism field to inform and educate his audience on the latest trends and developments in the rapidly evolving world of digital assets.

Outside his work, Semilore possesses other passions like all individuals. He is a big music fan with an interest in almost every genre. He can be described as a “music nomad” always ready to listen to new artists and explore new trends.

Semilore Faleti is also a strong advocate for social justice, preaching fairness, inclusivity, and equity. He actively promotes the engagement of issues centred around systemic inequalities and all forms of discrimination.

He also promotes political participation by all persons at all levels. He believes active contribution to governmental systems and policies is the fastest and most effective way to bring about permanent positive change in any society.

In conclusion, Semilore Faleti exemplifies the convergence of expertise, passion, and advocacy in the world of crypto journalism. He is a rare individual whose work in documenting the evolution of cryptocurrency will remain relevant for years to come.

His dedication to demystifying digital assets and advocating for their adoption, combined with his commitment to social justice and political engagement, positions him as a dynamic and influential voice in the industry.

Whether through his meticulous reporting at NewsBTC or his fervent promotion of fairness and equity, Semilore continues to inform, educate, and inspire his audience, striving for a more transparent and inclusive financial future.

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